Roger H Flaxman ACII
Chartered Insurance Practitioner, Strategic risk and management consultant
Managing Director, Flaxman Trafalgar Ltd
A comment from Roger H Flaxman, ACII, Chartered Insurance Practitioner and an independent risk and insurance consultant, on the Post Magazine round table discussion "Learning the Art of Self Promotion".
As an insurance professional of some 40 years I was encouraged by Lynne Rouse' report "Learning the Art of Self Promotion" 14th May. This is good, positive thinking but any agenda for action for change, which was the purpose of the round table discussion, must have the support of the main boards of the insurance industry's leading lights, both insurers and brokers, because without it no-one in HR will have the power or incentive to make a change.
It must be recognised that the boards will have an immediate problem in making this change because their obligations to shareholders are not entirely aligned with the sentiments expressed by the round table, so a strategy is required to get an agreed alignment. More about this later.
HR does indeed have an opportunity to influence change. The HR department are very often the first people that candidates meet, after the security guard and receptionist and they have an opportunity to make a strong impression upon the candidate giving them the confidence to believe in the exciting, challenging and humanitarianly worth-while work that the insurance industry does for society. They now need new tools, skills and authority to make the right impression; an impression that carries with it the new values of the insurance industry, the company itself and the people they will work with. Getting those in place is the first challenge.
The boards' dilemma
The main dilemma for the board is how to make a change towards values that attract talent as proposed by the members of the round table. These included "finding people who are focused more on the total package rather than purely on the money" and ".....a career focused on selling the positives rather than purely focused on money"
The problem is that the universal benchmark for successful companies is measured by shareholder value, not consumer or stakeholder values. In short, money comes first and last in the current economic conditions. It is just possible that this may change in the next five or ten years because already there are mutterings in academic circles that shareholder value is under scrutiny from the East and under pressure from the West. In the meantime we mustn't hold our breath but there are real issues of future positioning facing insurance companies that shareholder value imperatives could prevent from being addressed. Fundamentally, the insurance industry is about money and that is inconsistent with the strategies and values associated with customer service because the boards of companies are required to deliver shareholder value before customer value. The foot soldiers may try to deliver customer service but history shows they are soon put right by those managers measured by financial results alone.
Perception of values
Looking at this quandary from different perspectives may help to cast some light on opportunities for change that do not throw the baby out with the bathwater.
Banking has attracted people largely by the prospects of money and the images that money can buy. An old school friend once said to me that "if you want to make money work with money; other peoples' money". He did, he has and he is not happy.
Insurance has never attracted the potential bankers, lawyers and accountants because it simply hasn't acquired a similar image of money, status and power to influence. It should, but it hasn't.
The round table discussion compared insurance only with banking. Agreed it is the nearest competitor in the financial services industry but is that comparison the right one or the only one? I would argue that an insurance policy and a mortgage contract have a complexity comparable with a will, the deeds to a property, a shareholders agreement, a financial report and accounts, to name just a few of the things that an ordinary person is likely to come into contact with at some time in life. If we need any of these we go to a solicitor or accountant and they advise us on the merits of the documents, the risks and benefits and the consequences associated with each of them.
The mortgage document and the insurance policy on the other hand are sold without any reference to professional advice from a professional who is independent of the sale of the commodity or service. Considering the cost and value ratio of these instruments it is difficult to make a case for them being treated so differently. The consequences of insurance failing to pay can be catastrophic and if the reason is a few words in the contract then the value of professional advice becomes immediately apparent.
What has this got to do with recruiting the right people? If we are right in saying that there is more to a job than money then there has to be more to the career than being measured by sales. Can the insurance industry make that claim to new, bright graduates at the moment? Can candidates for the insurance industry expect to be regarded as insurance professionals as their career progresses, as distinct from salesmen or commission agents?
Recognising that it is not possible to give advice on a commodity that costs as little as a few hundred pounds, there is a problem. How to address it is the second challenge; one for early debate.
The buyers' interest.
An insurance policy is intended to protect the insured in the event of a happening of the "perils" for which the policy is designed. The Insured is not interested in how insurance works any more than how banking works (although that might be changing) they simply want to know that they have cover for a foreseeable loss or claim for which they have paid a premium in the expectation of cover without quibble.
The insurance industry has, during my career, become client averse. It is commonly perceived by the public that it is the mission of the insurance industry to not pay a claim. I have frequently heard insureds referred to by insurance people as "the enemy". There is a culture that has built up where some insurers appear to expect the insured to be dishonest or fraudulent and their claims personnel appear to have been encouraged to take this view as a matter of course. This is deeply distressful to the innocent and will not encourage the right kind of people to join the industry.
It doesn't matter that this perception is often driven by the exception rather than the rule. Examples including pensions, endowments, critical illness, mobile phones, motor mechanical breakdown, payment protection have all been the subject of press comment and actual cases of misselling or misrepresentation that get talked about in pubs, clubs and dinner parties that cause people to believe that they don't stand a chance against an insurer. People want to deal with people, in good faith. The industry needs the trust of its buyers. With that will come young people who are proud to be serving within the insurance industry. It is not enough for the CII to promote professionalism to the industry. The industry must promote professionalism and trust to the buying public. There is a third challenge.
The employee's interest
The lessons of the recent banking crisis have been only partly learned to date but one thing is certain and that is that our university graduates are not fooled by fool's gold. They have seen the outcome of twenty five years of financial smoke and mirrors and how it has affected their family and friends. They want to work in an environment where they can be stimulated, fairly rewarded and respected for doing a good job well. At the moment they are obviously doubtful that this is on offer.
Insurance means nothing until there is a claim. When there is a claim and the insurance professional can help the insured to recover, with expert service, prompt payment and courtesy, there is a satisfaction that cannot be measured in any other terms. Regrettably this is not the norm and people know it. Parents can influence careers of their off-spring; their influence is from their experience and perceptions.
So what of the plight of the HR department?
Collectively HR directors need to propose a strategy to their respective boards that they will buy into and ensure is delivered via the directors and managers under their control.
The authority of HR executives to do this must be a central part of the organisation's business strategy. If they are hired as the experts in people skills allow them to be experts.
The HR skills required are not just the qualification but the experience that comes with time. This requires constant updating of conventions, social influences and trends and the ability to talk knowledgeably about the realities of the industry as a place to serve a career. Most of all they must interface with the people doing or having done the job at the coal face. That is where the real self- promotion values will be found.
The tools required are not just gizmos for measuring aptitude and character but the ability to select and develope employees that deliver the good things that the industry talks about. This is cultural fit.
Making the desired changes requires a partnership between the money - skilled directors and the human capital experts and a strategy that focuses not just on shareholder value but client, customer and stakeholder value for the coming twenty years. It is a partnership that needs to be revisited for its intended function and purpose. That is the final challenge for us, today's leaders, for our legacy.
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